On September 26, 2013 the USPS proposed a collection of rate increases on so-called “Market Dominant” mail, which includes first-class letters, postcards and flats. We’re here to simplify the rates and distinguish between what is definite and what is only possible.

While the first-class stamp rate attracts the most media attention, the proposed increases include numerous USPS products. And if that wasn’t enough, there are actually two different increase requests in play, one of which would result in larger rate hikes.

The USPS “competitive” mail classes (package shipping) are under a separate request that is still pending and not covered in this article.

The CPI Increase

Postal regulations allow the USPS to request annual rate increases proportional to the rising Consumer Price Index (CPI). You can think of this as keeping up with the rate of inflation.

Since the CPI rose about 1.6% in 2012, the USPS asked for a similar increase in its postal rates. The Postal Regulatory Commission (PRC), the federal entity that governs the USPS, is likely to approve this request by early November, after which the increases will go into effect on January 26, 2014.

From this CPI-based increase, first class stamps will rise from $0.46 to $0.47 (about 2%, but that’s as close as they can get with one-cent increments).

We expect most USPS products to see rate increases in line with the CPI.

The Exigent Increase

The what?

If you’re not familiar with the term “exigent”, join most of the rest of the English-speaking world. Think of this as the “difficult times” increase. The USPS exigent request would be in addition to the CPI increase.

If approved, first class stamps would increase three cents ($0.01 CPI plus $0.02 exigent) on January 26, 2013.

Provisions for exigent increases were built into postal regulations to allow for raising rates in emergency or catastrophic conditions. While nobody would argue that the USPS is having difficult times, there is some debate over whether its current financial situation constitutes the required “emergency” conditions.

The postal service requested exigent increases at the same time as the CPI request. The PRC has until Christmas Day 2013 to approve or deny the exigent increase.

Hopefully we’ve demystified some of the USPS rate outlook over the next few months. You can count on at least a small across-the-board increase, but it will be substantially larger if the exigent request is approved.

We’ll let you know about the package shipping rate increases when the USPS request for Competitive products is available.

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